Taiwan Indicts Three Over Alleged Theft Of TSMC Trade Secrets

Taiwanese prosecutors have charged three people over the alleged theft of TSMC's trade secrets.

TSMC, the world's biggest contract chipmaker and Taiwan's crown jewel, hailed the move, which followed a legal complaint earlier this month. It says the complaint is linked to "classified trade secrets tied to core national key technologies."

The chipmaker confirmed in an emailed statement that the prosecutor had determined the defendants in the company's original complaint "were suspected of violating the National Security Act" and had "initiated criminal proceedings following the conclusion of the investigation."

Taiwan amended its National Security Act two years ago to increase the potential punishments for the theft of trade secrets relating to core technologies. According to a report by Taiwan's national news agency on Wednesday, prosecutors say these are the first indictments under the new provision. The Intellectual Property Branch of the Taiwan High Prosecutors Office released a video explainer (in Mandarin) of the law this morning.

The three accused include a former TSMC worker who joined the Taiwanese office of Japanese chipmaking equipment manufacturer Tokyo Electron, and two others who are alleged to have pilfered secrets about TSMC's industry-leading 2nm production process.

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Tokyo Electron said earlier this month that it had "taken strict disciplinary action and dismissed the personnel involved who worked at [its] Taiwan subsidiary," and was committed to cooperating with the authorities.

That individual reportedly faces a 14-year sentence. Taiwan's amended National Security Act allows for up to 12 years, but in this case part of the sought sentence is for the more general theft of trade secrets. The other two could potentially face sentences of up to nine and seven years.

TSMC said it discovered the alleged theft last month, conducting an internal investigation before alerting the authorities. It said it would pursue trade secret violations "to the fullest extent of the law."

The 2nm production process is the next big (or tiny) thing in chipmaking, and Apple supplier TSMC is apparently in the lead, with mass production slated to begin in the fourth quarter of this year. However, rival foundry Samsung as well as Japan's Rapidus are snapping at its heels.

Former US Commerce Secretary Gina Raimondo testified to the House Appropriations Committee last year that the United States "buys 92 percent of its leading-edge chips from TSMC in Taiwan." ®